Task Force: Raise Unemployment Trust Fund Balance to $750M

BATON ROUGE – A Louisiana task force voted Thursday to recommend using federal stimulus money to raise the balance of the fund that pays for unemployment benefits to $750 million.

The fund has been exhausted by unprecedented demand during the COVID-19-related economic downturn. How much it would cost to raise the balance to $750 million, which under existing law would keep employer taxes and worker benefits at their current level, depends on how much the state collects from employers’ tax payments and how much officials are forced to borrow from the federal government to pay benefits.

State officials said last week first-quarter tax payments would begin arriving in the next few weeks, which would allow the state to stop borrowing, at least temporarily. Louisiana Workforce Commission Secretary Ava Dejoie said the state’s debt to the federal government might reach $240 million.

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Task force members agreed the state needed to retire the federal debt, but some questioned prioritizing the trust fund balance over more immediate needs.

The state law that would raise the amount of employers’ wage base that is taxable to replenish the fund has been suspended, and employers would not be assessed a separate state “solvency tax” until the Revenue Estimating Conference officially recognizes the fund is below $100 million in September, members said.

“That Rescue Plan money could be much better allocated to help both workers and businesses in the state,” said Erika Zucker with Loyola University Law School’s Workplace Justice Project.

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Advocates for workers also objected to the lack of a concrete recommendation for raising the maximum weekly benefit, which the task force also was charged with looking into. Unemployed workers in Louisiana receive, at most, $247 a week, second-lowest in the nation, which represented 49% of the average weekly wage when it was established and equates to less than 30% of the average wage today, officials said.

“It feels incredibly one-sided,” said Neva Butkus with the Louisiana Budget Project. “By one-sided, I mean favoring businesses heavily over workers who are struggling right now as well.”

The task force majority, however, voted only to recommend that the maximum benefit should never fall below $247 and that “steps should be taken to increase it.”

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“Absent a movement to restoring the fund to a reasonable level, which I do believe this will achieve as it’s laid out [in the task force recommendation], there will be discussion about benefit increases from our end,” said Jim Patterson with the Louisiana Association of Business and Industry.

Gov. John Bel Edwards has said replenishing the unemployment insurance trust fund is his top priority for the state’s $3.2 billion American Rescue Plan allocation, but he has not publicly stated how much money his administration would recommend for that purpose. The Louisiana Legislature would have to approve the spending plan during their session, which begins Monday.


By David Jacobs of the Center Square

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